Impacts of increased house advantages on reel slots

Abstract

Purpose

This study aims to examine how differences in the casino advantage (i.e. price) of otherwise identical slot machines affect their revenue production, when the price is hidden from the players. The study aims to identify the ability of players to recognize differences in the concealed prices of paired machines, over time. Both items are paramount to slot revenue optimization.

Design/methodology/approach

Using 274 daily observations, paired-samples t-tests examined whether live performance metrics were affected by the differences in the casino advantage (namely, par) of the paired games. Time-series regression analyses were conducted to understand whether players shifted their play away from the high-par games, over time.

Findings

The results indicated that increased casino advantages produced increased revenue, with no evidence of diminished play on the high-par games.

Practical implications

The results contradicted the inveterate wisdom of the industry by demonstrating that players are not hypersensitive to increased prices/pars, and that such increases can actually lead to increased revenue, despite egregious par gaps.

Originality/value

Added valuable results to a nascent research stream aimed at understanding the effects of obfuscated price/pars. Expanded the gaming literature by increasing the differences in the prices/pars of paired game titles over an increased sample period. Both conditions increased the chances of observing changes in revenue performance, and play migration to the low-par game. Both manipulations have been previously cited as meaningful extensions of the literature.

Citation

Lucas, A.F. (2019), "Impacts of increased house advantages on reel slots", International Journal of Contemporary Hospitality Management, Vol. 31 No. 7, pp. 2626-2640. https://doi.org/10.1108/IJCHM-07-2018-0577